1 00:00:00,009 --> 00:00:02,259 Speaker 1: This is AC N A podcast. 2 00:00:09,579 --> 00:00:12,319 Speaker 1: Hey, welcome back to Money Talks. I'm your host, Andrea 3 00:00:12,329 --> 00:00:16,440 Speaker 1: He on the series. This or that. My guest weighs 4 00:00:16,450 --> 00:00:20,579 Speaker 1: the pros and cons of two options. Now, in previous episodes, 5 00:00:20,590 --> 00:00:24,950 Speaker 1: we've talked about car ownership and H DB flats. Today 6 00:00:24,959 --> 00:00:29,760 Speaker 1: we turn our attention to investment. It's practically a national 7 00:00:29,770 --> 00:00:33,839 Speaker 1: pastime for Singaporeans to discuss ways to grow wealth 8 00:00:34,027 --> 00:00:37,457 Speaker 1: or in other words, make your money work harder for you. 9 00:00:37,597 --> 00:00:40,547 Speaker 1: Go on on the days where people are content to 10 00:00:40,556 --> 00:00:44,597 Speaker 1: let their savings sit in a bank account earning meager 11 00:00:44,606 --> 00:00:49,187 Speaker 1: interest rates, whether it's fixed deposits, t bills, government bonds, 12 00:00:49,196 --> 00:00:53,326 Speaker 1: the options are wide for those looking to grow their money, 13 00:00:53,527 --> 00:00:57,396 Speaker 1: but for those with a bigger risk appetite, the stock 14 00:00:57,407 --> 00:00:58,376 Speaker 1: market is always 15 00:00:58,473 --> 00:01:03,004 Speaker 1: a tantalizing but also daunting option. I mean, there are 16 00:01:03,013 --> 00:01:07,143 Speaker 1: so many stocks to look through. How do you decide 17 00:01:07,153 --> 00:01:09,704 Speaker 1: what works best for you? What I want to know 18 00:01:09,712 --> 00:01:12,844 Speaker 1: is should I be stock picking and hopefully find a 19 00:01:12,853 --> 00:01:16,414 Speaker 1: winner or should I just buy index funds and let 20 00:01:16,424 --> 00:01:19,512 Speaker 1: that work for me. So to help me with this question, 21 00:01:19,524 --> 00:01:22,823 Speaker 1: I have Adam Wong, editor in chief at personal finance 22 00:01:22,920 --> 00:01:27,091 Speaker 1: and investment website, the fifth person. Hey, welcome to Money talks, Adam. 23 00:01:27,100 --> 00:01:29,371 Speaker 1: Thank you and good to have you with us. So, 24 00:01:29,380 --> 00:01:33,960 Speaker 1: do you remember when you first started investing? What did 25 00:01:33,971 --> 00:01:37,221 Speaker 1: you buy? Tell us I actually started investing in probably 26 00:01:37,231 --> 00:01:40,521 Speaker 1: the worst possible time. It was just right before the 27 00:01:40,530 --> 00:01:44,541 Speaker 1: financial crisis in 2008. Yeah. So I was looking at 28 00:01:44,551 --> 00:01:47,291 Speaker 1: some of the US stocks and at that time, 29 00:01:47,599 --> 00:01:50,760 Speaker 1: I was just dabbling into things and I thought I 30 00:01:50,769 --> 00:01:53,680 Speaker 1: was doing the right thing. I was learning how to 31 00:01:53,690 --> 00:01:56,959 Speaker 1: do it, you know, but then the crash came and 32 00:01:56,970 --> 00:01:59,319 Speaker 1: everything went down and then that became the best time 33 00:01:59,330 --> 00:02:02,220 Speaker 1: to invest. Actually, I know, I know like people almost 34 00:02:02,230 --> 00:02:04,970 Speaker 1: wait for markets to crash just to invest. What did 35 00:02:04,980 --> 00:02:06,879 Speaker 1: you buy? I bought a bank. So you bought a 36 00:02:06,889 --> 00:02:09,240 Speaker 1: banking stock. Yes. And I was a custom of the 37 00:02:09,250 --> 00:02:11,460 Speaker 1: bank as well. I go to its branches and almost 38 00:02:11,470 --> 00:02:15,038 Speaker 1: every month looks good on the surface. But then it 39 00:02:15,050 --> 00:02:16,770 Speaker 1: really takes a trained eye 40 00:02:17,070 --> 00:02:19,589 Speaker 1: to have a look at what's happening, you know, because 41 00:02:19,600 --> 00:02:21,240 Speaker 1: that was the start of the financial crisis. And I 42 00:02:21,250 --> 00:02:25,399 Speaker 1: realized on hindsight, I wasn't well equipped enough to understand 43 00:02:25,410 --> 00:02:27,829 Speaker 1: that stock and then it went down and lost a 44 00:02:27,839 --> 00:02:31,520 Speaker 1: bit of money on that. Homework always helps man. So 45 00:02:31,529 --> 00:02:35,250 Speaker 1: what was your motivation for getting into investments in the 46 00:02:35,258 --> 00:02:38,820 Speaker 1: first place? So before you decided on buying this banking stock. 47 00:02:39,250 --> 00:02:42,410 Speaker 1: What prompted you to say, hey, you know what, it's 48 00:02:42,419 --> 00:02:45,199 Speaker 1: time to put some money somewhere and make it work 49 00:02:45,210 --> 00:02:48,059 Speaker 1: for me. I think it starts the same with most people. 50 00:02:48,070 --> 00:02:50,380 Speaker 1: You start working, you save a little bit of money 51 00:02:50,520 --> 00:02:52,580 Speaker 1: and then you see the money start to accumulate in 52 00:02:52,589 --> 00:02:54,729 Speaker 1: your bank account and you go the interest rates in 53 00:02:54,740 --> 00:02:57,850 Speaker 1: the savings account, they don't get you anywhere. Fixed deposits 54 00:02:57,860 --> 00:03:00,320 Speaker 1: are a little bit too boring for someone. You know, 55 00:03:00,330 --> 00:03:03,240 Speaker 1: if you're young, you get a bit more excitable. And 56 00:03:04,130 --> 00:03:05,750 Speaker 1: so you look around and say, how do I grow 57 00:03:05,758 --> 00:03:06,199 Speaker 1: my money? 58 00:03:06,410 --> 00:03:08,910 Speaker 1: And the natural channel is just to have a look 59 00:03:08,919 --> 00:03:11,679 Speaker 1: at stocks because property is a bit for bigger investment. 60 00:03:11,690 --> 00:03:13,559 Speaker 1: So you take a look at the stock market and 61 00:03:13,570 --> 00:03:17,029 Speaker 1: you start looking for books, horses, youtube videos to find 62 00:03:17,038 --> 00:03:19,288 Speaker 1: out more about how you can start investing and that's 63 00:03:19,300 --> 00:03:21,538 Speaker 1: how I got started. And how old were you when 64 00:03:21,550 --> 00:03:25,769 Speaker 1: this was happening? I was mid twenties, I think. Ok. 65 00:03:25,910 --> 00:03:30,210 Speaker 1: Do you find more and more Singaporeans getting into investing 66 00:03:30,220 --> 00:03:33,220 Speaker 1: because it feels like you can throw a stone and 67 00:03:33,288 --> 00:03:38,479 Speaker 1: you would hit an investment, bro, or influencers as they're called. 68 00:03:38,490 --> 00:03:43,139 Speaker 1: Now my talking about investing on youtube, Instagram, tiktok. There's 69 00:03:43,149 --> 00:03:46,850 Speaker 1: just so much investment content out there. I even know 70 00:03:46,860 --> 00:03:51,809 Speaker 1: of uncles and aunties who actively discuss bank fixed deposit 71 00:03:51,820 --> 00:03:54,419 Speaker 1: rates and T bills. Ok. Do you see that happening? 72 00:03:54,429 --> 00:03:58,179 Speaker 1: What's your observation? Yes, that is true. A lot of Singaporeans, 73 00:03:58,190 --> 00:04:00,240 Speaker 1: especially since COVID happened. 74 00:04:00,630 --> 00:04:03,940 Speaker 1: A lot of people have started to want to learn 75 00:04:03,949 --> 00:04:06,210 Speaker 1: how to put their money somewhere and try to grow it. 76 00:04:06,220 --> 00:04:08,169 Speaker 1: I've been with the fifth person for 10 years. You know, 77 00:04:08,179 --> 00:04:12,479 Speaker 1: when we first started this website, I think Singaporeans weren't 78 00:04:12,490 --> 00:04:15,009 Speaker 1: as interested in these things or maybe they were not 79 00:04:15,020 --> 00:04:16,630 Speaker 1: as savvy. But 80 00:04:16,718 --> 00:04:21,848 Speaker 1: nowadays, information is everywhere, like you said on social media, Twitter, 81 00:04:21,859 --> 00:04:26,269 Speaker 1: youtube websites and it's so easy to learn about things. Nowadays, 82 00:04:26,278 --> 00:04:29,299 Speaker 1: the data is out there. What's important is knowing how 83 00:04:29,308 --> 00:04:33,338 Speaker 1: to sift through all that information. All the misinformation, you 84 00:04:33,348 --> 00:04:36,329 Speaker 1: must have a framework of knowing how to understand and 85 00:04:36,338 --> 00:04:37,949 Speaker 1: analyze all this data that's coming in 86 00:04:38,209 --> 00:04:40,600 Speaker 1: and then you make your decisions based on how you 87 00:04:40,609 --> 00:04:42,290 Speaker 1: want to invest because everyone is different, everyone has different 88 00:04:42,299 --> 00:04:45,709 Speaker 1: risk profiles and financial goals and then you take what 89 00:04:45,720 --> 00:04:48,299 Speaker 1: works for you and then you try and stick to that. 90 00:04:48,309 --> 00:04:51,459 Speaker 1: So you're saying it's a combination of both people having 91 00:04:51,470 --> 00:04:54,089 Speaker 1: just a stash of money from three years of not 92 00:04:54,100 --> 00:04:59,859 Speaker 1: spending it during COVID plus the wide exposure of content 93 00:04:59,869 --> 00:05:00,640 Speaker 1: on social media, 94 00:05:00,720 --> 00:05:05,010 Speaker 1: the availability. It's basically instant information. It is. And maybe 95 00:05:05,019 --> 00:05:07,950 Speaker 1: 10 years ago, most of your information would be through 96 00:05:07,959 --> 00:05:10,909 Speaker 1: your stockbroker calling you to tell you about, hey, you 97 00:05:10,920 --> 00:05:13,209 Speaker 1: want to have a look at this stock or exactly. 98 00:05:13,220 --> 00:05:15,959 Speaker 1: It makes me wonder what happens to the stockbrokers. Now, 99 00:05:15,970 --> 00:05:17,640 Speaker 1: are they out of a job they still have a 100 00:05:17,649 --> 00:05:20,450 Speaker 1: role to play. But it is increasingly just a lot 101 00:05:20,459 --> 00:05:22,928 Speaker 1: more easy to just get online, get a digital broker 102 00:05:22,940 --> 00:05:23,149 Speaker 1: and 103 00:05:23,480 --> 00:05:26,220 Speaker 1: do everything yourself through the app or the website. Do 104 00:05:26,230 --> 00:05:29,170 Speaker 1: you think there's a danger with having so much easy 105 00:05:29,178 --> 00:05:33,640 Speaker 1: to digest information about investing about money? That is a 106 00:05:33,649 --> 00:05:36,279 Speaker 1: great question. That was my mistake when I first started 107 00:05:36,290 --> 00:05:39,570 Speaker 1: investing because a little bit of information can be dangerous. 108 00:05:39,579 --> 00:05:42,649 Speaker 1: Because when you first start learning something, you get all excited. 109 00:05:42,660 --> 00:05:45,170 Speaker 1: You guys, this learning curve that you kind of feel like. Well, 110 00:05:45,178 --> 00:05:47,380 Speaker 1: I'm learning so many new things and then you want 111 00:05:47,390 --> 00:05:48,390 Speaker 1: to apply all of that, 112 00:05:48,609 --> 00:05:50,910 Speaker 1: but then too little information can be dangerous because you 113 00:05:50,920 --> 00:05:52,928 Speaker 1: think you know what you know, but then you end 114 00:05:52,940 --> 00:05:55,880 Speaker 1: up getting burned and then you realize that you do 115 00:05:55,890 --> 00:05:59,349 Speaker 1: have to have experience in this thing because it's not 116 00:05:59,359 --> 00:06:02,079 Speaker 1: just about information, it's about how you react to news, 117 00:06:02,089 --> 00:06:04,909 Speaker 1: how you react to bad news, how you react to 118 00:06:04,920 --> 00:06:07,600 Speaker 1: stock market crashes. All that is emotional that 119 00:06:07,890 --> 00:06:11,119 Speaker 1: data or information can help you with it. Something you 120 00:06:11,130 --> 00:06:14,428 Speaker 1: have to go through. That's a painful journey for everyone. 121 00:06:16,190 --> 00:06:19,178 Speaker 1: Just speaking from experience. Ok? So most of us know 122 00:06:19,190 --> 00:06:21,750 Speaker 1: that keeping money in the bank, it's the worst way 123 00:06:21,760 --> 00:06:24,809 Speaker 1: to grow your financial wealth. You mentioned it yourself. You 124 00:06:24,820 --> 00:06:26,399 Speaker 1: saw your money sitting in the bank 125 00:06:26,700 --> 00:06:29,320 Speaker 1: and said, you know what? It's not moving it's not growing, 126 00:06:29,329 --> 00:06:32,308 Speaker 1: let's put it somewhere else, would you say then that 127 00:06:32,320 --> 00:06:34,868 Speaker 1: investing in the stock market is the way to go? 128 00:06:35,019 --> 00:06:38,320 Speaker 1: It really depends on the individual. When I said putting 129 00:06:38,329 --> 00:06:40,260 Speaker 1: money in the bank was terrible. And that's from my 130 00:06:40,269 --> 00:06:42,809 Speaker 1: perspective because I wanted to grow my money faster than 131 00:06:43,079 --> 00:06:46,899 Speaker 1: 1% or 3% nowadays. OK? For someone who is retired 132 00:06:46,910 --> 00:06:50,510 Speaker 1: and maybe he or she has $20 million that's totally fine. 133 00:06:50,619 --> 00:06:52,929 Speaker 1: Put it in the bank is great, you know, so 134 00:06:52,940 --> 00:06:55,029 Speaker 1: it really depends on where you are in life. How 135 00:06:55,040 --> 00:06:56,720 Speaker 1: much you have, what are your goals? What your risk 136 00:06:56,730 --> 00:06:59,570 Speaker 1: profile is in general, if you are in your career 137 00:06:59,579 --> 00:07:01,529 Speaker 1: and you're saving some money and you want to grow 138 00:07:01,540 --> 00:07:04,540 Speaker 1: your investments. Historically, the stock market has been the best 139 00:07:04,549 --> 00:07:06,329 Speaker 1: way to grow your wealth. If you look at the 140 00:07:06,339 --> 00:07:07,429 Speaker 1: data over the, 141 00:07:07,500 --> 00:07:09,279 Speaker 1: the last 50 years in the US, anyway, the stock 142 00:07:09,290 --> 00:07:13,200 Speaker 1: market has outperformed real estate gold, obviously cash and all 143 00:07:13,209 --> 00:07:15,320 Speaker 1: of that. But does it mean it's the best way though? 144 00:07:15,359 --> 00:07:17,760 Speaker 1: I think you have to look at the asset class. 145 00:07:17,769 --> 00:07:22,230 Speaker 1: What are stocks? So stocks are essentially businesses and businesses 146 00:07:22,239 --> 00:07:25,309 Speaker 1: intrinsically are companies that they just that want to grow, 147 00:07:25,329 --> 00:07:27,510 Speaker 1: they want to improve, they want to have more customers, 148 00:07:27,519 --> 00:07:30,200 Speaker 1: they want to provide better products and services. That's how 149 00:07:30,209 --> 00:07:31,809 Speaker 1: they thrive. And of course, if you take a look 150 00:07:31,820 --> 00:07:31,850 Speaker 1: at 151 00:07:31,920 --> 00:07:34,859 Speaker 1: the stock market index is a collection of the best 152 00:07:34,869 --> 00:07:38,529 Speaker 1: stocks in a particular market. So obviously, the index should 153 00:07:38,540 --> 00:07:40,829 Speaker 1: grow because they will always contain, for example, the S 154 00:07:40,839 --> 00:07:42,890 Speaker 1: and P 500 in the US, the best 500 US 155 00:07:42,899 --> 00:07:46,899 Speaker 1: companies and there will be growth because those companies will 156 00:07:46,910 --> 00:07:50,519 Speaker 1: be the ones that become successful over time. So maybe 157 00:07:50,529 --> 00:07:53,309 Speaker 1: last time you would have your General Motors and stuff 158 00:07:53,320 --> 00:07:55,859 Speaker 1: like that today, you have Google and Amazon and stuff 159 00:07:55,869 --> 00:07:56,269 Speaker 1: like that. 160 00:07:56,619 --> 00:08:01,630 Speaker 1: So naturally stocks as businesses should grow. That's right. 161 00:08:05,450 --> 00:08:07,920 Speaker 2: Hello, my name is Steve Lei and I'm Theresa Tang. 162 00:08:07,929 --> 00:08:11,130 Speaker 2: And we are the hosts of CNN correspondent, a podcast 163 00:08:11,140 --> 00:08:13,250 Speaker 2: that takes you to the heart of the work our 164 00:08:13,260 --> 00:08:17,390 Speaker 2: correspondents do across the globe from China's COVID response to 165 00:08:17,399 --> 00:08:20,700 Speaker 2: the Child Care Center massacre in Thailand from the fall 166 00:08:20,709 --> 00:08:20,820 Speaker 2: of 167 00:08:21,429 --> 00:08:25,200 Speaker 2: to the rise of Anwar Ibrahim as Malaysia's Prime Minister, 168 00:08:25,209 --> 00:08:28,989 Speaker 2: we speak to the people at the reporting frontlines. So 169 00:08:29,000 --> 00:08:32,250 Speaker 2: if you want to know how the biggest global stories unfold, 170 00:08:32,260 --> 00:08:35,349 Speaker 2: make sure you follow or subscribe to us wherever you 171 00:08:35,359 --> 00:08:36,469 Speaker 2: get your podcasts, 172 00:08:41,140 --> 00:08:44,950 Speaker 1: buying stocks can be really quite daunting. I for one 173 00:08:44,960 --> 00:08:47,900 Speaker 1: don't even venture into it. I let my financial agent 174 00:08:47,909 --> 00:08:52,309 Speaker 1: just handle everything for me. For a new investor. Me included. 175 00:08:52,320 --> 00:08:55,020 Speaker 1: If I decide to go into stocks one day, can 176 00:08:55,030 --> 00:08:59,250 Speaker 1: you walk us through how we should approach stock kicking? 177 00:08:59,489 --> 00:09:03,030 Speaker 1: There's so many different ways you can invest. Some people 178 00:09:03,039 --> 00:09:06,520 Speaker 1: like to invest for dividends, for example, they invest in 179 00:09:06,530 --> 00:09:09,089 Speaker 1: the banks, the local banks or some of the here 180 00:09:09,340 --> 00:09:11,539 Speaker 1: because they give a very steady dividend. Some people are 181 00:09:11,549 --> 00:09:13,429 Speaker 1: looking more for growth. So maybe they look at the 182 00:09:13,440 --> 00:09:15,750 Speaker 1: US markets because the economy, there is so much bigger 183 00:09:15,760 --> 00:09:19,250 Speaker 1: company can scale across the entire US and become a 184 00:09:19,260 --> 00:09:22,760 Speaker 1: huge company or in China as well nowadays. So if 185 00:09:22,770 --> 00:09:25,109 Speaker 1: you're looking for growth, I think the stock market is 186 00:09:25,119 --> 00:09:28,169 Speaker 1: one of the best ways you can consider doing that 187 00:09:28,450 --> 00:09:31,020 Speaker 1: and how you can get started is basically you have 188 00:09:31,030 --> 00:09:33,429 Speaker 1: to understand yourself, what do you want to achieve with 189 00:09:33,440 --> 00:09:33,968 Speaker 1: your money? 190 00:09:34,320 --> 00:09:37,608 Speaker 1: Ok. So for example, someone who is looking for passive income, 191 00:09:37,619 --> 00:09:39,969 Speaker 1: then they would start looking at stocks that give a 192 00:09:39,979 --> 00:09:42,849 Speaker 1: steady dividends. So let's park my money there, let it grow. 193 00:09:42,859 --> 00:09:44,299 Speaker 1: I leave it alone. I don't have to think about 194 00:09:44,590 --> 00:09:47,179 Speaker 1: and that achieves your investment goal for someone else who 195 00:09:47,190 --> 00:09:49,090 Speaker 1: wants something else. They will start looking at a different 196 00:09:49,099 --> 00:09:51,468 Speaker 1: kind of stocks that will give them what they want 197 00:09:51,479 --> 00:09:53,780 Speaker 1: to achieve. So more growth. So what would be the 198 00:09:53,789 --> 00:09:56,429 Speaker 1: personality of someone who goes for growth stocks? 199 00:09:56,500 --> 00:09:59,619 Speaker 1: I mean, this is a stereotype but in general, someone 200 00:09:59,630 --> 00:10:02,510 Speaker 1: who is younger wants to grow the money faster, it 201 00:10:02,520 --> 00:10:05,500 Speaker 1: has less to lose because if someone who's already made 202 00:10:05,510 --> 00:10:08,049 Speaker 1: their millions, they want to play it safe, you know, 203 00:10:08,059 --> 00:10:10,549 Speaker 1: retirement funds, you don't want to touch too much of that. Yeah. 204 00:10:10,559 --> 00:10:14,979 Speaker 1: So someone who is still relatively young, still working. So 205 00:10:14,989 --> 00:10:17,190 Speaker 1: even if they make a mistake in the stock market, 206 00:10:17,200 --> 00:10:18,609 Speaker 1: it can happen, it will happen, 207 00:10:18,880 --> 00:10:21,090 Speaker 1: they lose money there, they still have active income, they 208 00:10:21,099 --> 00:10:22,619 Speaker 1: can make it back, they can make it back, they 209 00:10:22,630 --> 00:10:25,459 Speaker 1: can save more money. But someone who is retired, that's 210 00:10:25,469 --> 00:10:27,739 Speaker 1: a little bit more risky. I think there's also differences 211 00:10:27,750 --> 00:10:30,089 Speaker 1: between men and women. For example, the kind of stock 212 00:10:30,099 --> 00:10:32,969 Speaker 1: that they pick, which brings me to my next question. 213 00:10:32,979 --> 00:10:35,780 Speaker 1: So the alternative to stock picking is index funds, which 214 00:10:35,789 --> 00:10:39,539 Speaker 1: is what I happen to be in because I literally again, 215 00:10:39,549 --> 00:10:41,340 Speaker 1: don't have to think about it. Someone else does it 216 00:10:41,349 --> 00:10:43,659 Speaker 1: for me, correct me if I'm wrong. It's a basket 217 00:10:43,669 --> 00:10:43,909 Speaker 1: of it. 218 00:10:44,002 --> 00:10:46,153 Speaker 1: Is that what an index fund is? So an index 219 00:10:46,163 --> 00:10:49,203 Speaker 1: fund is a fund that tracks an index, the collection 220 00:10:49,213 --> 00:10:52,742 Speaker 1: of stocks. It could you explain to us how index 221 00:10:52,752 --> 00:10:56,143 Speaker 1: funds are then different from buying stocks? So what's the 222 00:10:56,153 --> 00:10:58,963 Speaker 1: difference between stock picking and buying an index fund? So 223 00:10:58,973 --> 00:11:02,742 Speaker 1: when you do stock picking, you are essentially telling yourself, hey, 224 00:11:02,752 --> 00:11:05,463 Speaker 1: I think I know which stocks are going to be 225 00:11:05,473 --> 00:11:07,903 Speaker 1: the best or going to perform or achieve whatever I 226 00:11:07,913 --> 00:11:09,033 Speaker 1: want to achieve. And, 227 00:11:09,125 --> 00:11:11,325 Speaker 1: and you go in doing your research and your analysis 228 00:11:11,335 --> 00:11:13,245 Speaker 1: and then you come up with a thesis and then 229 00:11:13,255 --> 00:11:14,995 Speaker 1: you come up with a conclusion, I'm going to buy 230 00:11:15,005 --> 00:11:20,585 Speaker 1: these bunch of stocks well researched, presumably, right? But mistakes 231 00:11:20,596 --> 00:11:22,505 Speaker 1: will happen. Ok. So as a stock picker, you got 232 00:11:22,515 --> 00:11:24,546 Speaker 1: to back yourself that you know what you're doing and 233 00:11:24,556 --> 00:11:26,536 Speaker 1: then you pick your stocks and you create your own 234 00:11:26,546 --> 00:11:29,426 Speaker 1: portfolio that suits your needs. On the other hand, if 235 00:11:29,434 --> 00:11:31,486 Speaker 1: you don't have the time or the interest to do 236 00:11:31,495 --> 00:11:34,096 Speaker 1: all these things, you can essentially diversify 237 00:11:34,580 --> 00:11:37,400 Speaker 1: your investments and just buy an index fund or an 238 00:11:37,409 --> 00:11:41,070 Speaker 1: index ETF exchange traded fund that basically allows you to 239 00:11:41,080 --> 00:11:43,390 Speaker 1: just own the entire basket of stocks. So instead of 240 00:11:43,400 --> 00:11:46,080 Speaker 1: picking individual stocks and doing all your research, you just 241 00:11:46,090 --> 00:11:48,369 Speaker 1: kind of go, you know what, I'll just buy everything 242 00:11:49,679 --> 00:11:51,949 Speaker 1: and I have a piece of everything. Yeah, I have 243 00:11:51,960 --> 00:11:53,950 Speaker 1: a piece of everything. So even if one of the 244 00:11:53,960 --> 00:11:56,520 Speaker 1: stocks doesn't do so well, I have so many other 245 00:11:56,530 --> 00:11:59,489 Speaker 1: stocks in that fund as well. So on average, you 246 00:11:59,500 --> 00:12:02,880 Speaker 1: should be doing ok. So you don't expect to do 247 00:12:02,890 --> 00:12:06,289 Speaker 1: fantastically well, because you're buying the entire market, for example. 248 00:12:06,409 --> 00:12:10,049 Speaker 1: So you should be making market returns, average returns, but 249 00:12:10,059 --> 00:12:12,409 Speaker 1: that's ok because if that's what you want and that 250 00:12:12,419 --> 00:12:13,119 Speaker 1: suits you, 251 00:12:13,640 --> 00:12:16,539 Speaker 1: there's a totally fine way to invest. Would that necessarily 252 00:12:16,549 --> 00:12:19,979 Speaker 1: mean that there are fewer risks with buying an index 253 00:12:19,989 --> 00:12:23,460 Speaker 1: fund versus stock picking in general? You could say that 254 00:12:23,469 --> 00:12:26,460 Speaker 1: because then you kind of like diversify your risk across 255 00:12:26,469 --> 00:12:28,690 Speaker 1: a whole range of stocks, but it depends on the 256 00:12:28,700 --> 00:12:31,619 Speaker 1: index as well. So if we are talking about the 257 00:12:31,630 --> 00:12:35,330 Speaker 1: broad based index indices like the Singapore S T I 258 00:12:35,340 --> 00:12:36,909 Speaker 1: or the S and P 500 259 00:12:37,340 --> 00:12:41,710 Speaker 1: they represent the country's stock market in a sense. But 260 00:12:41,719 --> 00:12:43,909 Speaker 1: if you go with a more specific index like electric 261 00:12:43,919 --> 00:12:46,270 Speaker 1: vehicle index, so that gives you exposure into the electric 262 00:12:46,280 --> 00:12:49,880 Speaker 1: vehicle industry, so that one could be a bit more tricky. 263 00:12:50,510 --> 00:12:55,080 Speaker 1: So there are specificities within the index fund market. There's 264 00:12:55,090 --> 00:12:57,700 Speaker 1: so many different funds out there that can give you 265 00:12:57,710 --> 00:13:01,049 Speaker 1: exposure to different sectors and different industries. But of course, 266 00:13:01,059 --> 00:13:04,109 Speaker 1: the most diversified kinds are those that basically represent the 267 00:13:04,119 --> 00:13:04,989 Speaker 1: whole market. 268 00:13:05,216 --> 00:13:09,216 Speaker 1: OK. Where does an exchange traded fund or an ETF 269 00:13:09,226 --> 00:13:12,687 Speaker 1: sit in all of this. So an exchange traded fund 270 00:13:12,697 --> 00:13:16,117 Speaker 1: is essentially a fund. Typically you buy funds through over 271 00:13:16,127 --> 00:13:19,905 Speaker 1: the counter that invest in these basket of stocks or assets. 272 00:13:19,916 --> 00:13:23,276 Speaker 1: It's grown in popularity over the last 10, 15, 20 years. Nowadays, 273 00:13:23,285 --> 00:13:26,596 Speaker 1: the funds are listed on the stock exchange. So they 274 00:13:26,606 --> 00:13:28,867 Speaker 1: are traded like a stock so you can buy and 275 00:13:28,877 --> 00:13:30,877 Speaker 1: sell any time you want based on the price at 276 00:13:30,886 --> 00:13:33,086 Speaker 1: that point in time, uh gives you the liquidity 277 00:13:33,184 --> 00:13:35,603 Speaker 1: of flexibility. So it is a fund but trades like 278 00:13:35,614 --> 00:13:37,833 Speaker 1: a stock which gives you that flexibility as well. So 279 00:13:37,843 --> 00:13:41,463 Speaker 1: that's called an exchange traded fund, which is extremely popular 280 00:13:41,473 --> 00:13:44,304 Speaker 1: and the fees are extremely low as well. It suits 281 00:13:44,314 --> 00:13:46,924 Speaker 1: a lot of people because it gives them diversify exposure 282 00:13:46,934 --> 00:13:50,044 Speaker 1: to a particular country or sector for low fees. OK? 283 00:13:50,054 --> 00:13:52,642 Speaker 1: So let's now zoom out a little bit and talk 284 00:13:52,653 --> 00:13:56,882 Speaker 1: about the stock markets. They are very volatile given the 285 00:13:56,893 --> 00:14:01,054 Speaker 1: current macroeconomic conditions one day, good news, 286 00:14:01,151 --> 00:14:03,921 Speaker 1: the markets are rallying the next day. It's a decline. 287 00:14:03,931 --> 00:14:08,500 Speaker 1: This index has lost this much. It's so unpredictable and 288 00:14:08,510 --> 00:14:12,270 Speaker 1: it's almost a challenge to not react emotionally to news 289 00:14:12,280 --> 00:14:15,681 Speaker 1: like that. Right. So in such an unpredictable environment, should 290 00:14:15,690 --> 00:14:19,721 Speaker 1: your average retail investor just give up trying to time 291 00:14:19,731 --> 00:14:24,161 Speaker 1: the markets or look for undervalued stocks and just buy 292 00:14:24,171 --> 00:14:27,560 Speaker 1: and hold index funds. So for the typical person who 293 00:14:27,570 --> 00:14:29,060 Speaker 1: doesn't have the time 294 00:14:29,280 --> 00:14:31,539 Speaker 1: or the interest to do all these things, then definitely 295 00:14:31,549 --> 00:14:34,090 Speaker 1: an ETF is a great solution to that passive way 296 00:14:34,099 --> 00:14:36,200 Speaker 1: of investing. You just kind of like dollar cost. Average. 297 00:14:36,210 --> 00:14:38,820 Speaker 1: Most people do that into a particular ETF that they 298 00:14:38,830 --> 00:14:40,770 Speaker 1: like and then they do it over a number of 299 00:14:40,780 --> 00:14:43,919 Speaker 1: years because over the long term, the stock market has 300 00:14:43,929 --> 00:14:46,580 Speaker 1: performed very well. We can't say that future performance will 301 00:14:46,590 --> 00:14:48,289 Speaker 1: be equal to the past as well. 302 00:14:48,640 --> 00:14:51,400 Speaker 1: But in general, yes, the data historically in the US 303 00:14:51,409 --> 00:14:53,989 Speaker 1: in Singapore, the stock market has performed pretty well. So 304 00:14:54,000 --> 00:14:57,000 Speaker 1: the ETF gives you the exposure to the entire market 305 00:14:57,070 --> 00:14:59,000 Speaker 1: and then you can just do the cost average over 306 00:14:59,010 --> 00:15:01,479 Speaker 1: a period of time, 20 years from now, it should 307 00:15:01,489 --> 00:15:03,630 Speaker 1: be worth a lot more. And that's the way that 308 00:15:03,640 --> 00:15:07,109 Speaker 1: many people can start investing. If you are interested in investing, 309 00:15:07,119 --> 00:15:09,030 Speaker 1: you really want to get into the nitty gritty and 310 00:15:09,039 --> 00:15:10,250 Speaker 1: the nuts and bolts into 311 00:15:10,500 --> 00:15:13,270 Speaker 1: what makes a great company great and how they can 312 00:15:13,280 --> 00:15:17,489 Speaker 1: outperform their competitors or the general market. And you really 313 00:15:17,500 --> 00:15:20,239 Speaker 1: like doing that then by all means you can do 314 00:15:20,250 --> 00:15:22,000 Speaker 1: that as well and some people do a mixture. So 315 00:15:22,010 --> 00:15:25,539 Speaker 1: maybe half of their portfolio is into a T F 316 00:15:25,570 --> 00:15:28,359 Speaker 1: diversify that part and a certain part is this portion 317 00:15:28,369 --> 00:15:30,119 Speaker 1: of the portfolio. I want to stop. We talked about 318 00:15:30,130 --> 00:15:33,130 Speaker 1: this earlier about how there are certain stereos 319 00:15:33,219 --> 00:15:36,599 Speaker 1: types where those who are older, they would invest in 320 00:15:36,609 --> 00:15:39,989 Speaker 1: something that's a little bit more steady. Whereas a younger 321 00:15:40,000 --> 00:15:43,109 Speaker 1: person with a longer career runway would invest in a 322 00:15:43,119 --> 00:15:47,640 Speaker 1: more adventurous path. Does that change with age? I think 323 00:15:47,650 --> 00:15:50,530 Speaker 1: in general that's how it works for most people. Once 324 00:15:50,539 --> 00:15:53,530 Speaker 1: they realize that I can't take this amount of risk, 325 00:15:53,539 --> 00:15:55,849 Speaker 1: they start to derisk their portfolio 326 00:15:56,250 --> 00:15:58,130 Speaker 1: for me. I feel it as well. In my twenties. 327 00:15:58,140 --> 00:15:59,530 Speaker 1: I was looking at all the exciting stuff. How can 328 00:15:59,539 --> 00:16:02,969 Speaker 1: I make money faster? Right. And then now that I've 329 00:16:02,979 --> 00:16:05,960 Speaker 1: saved more and invested more and then I'm in my 330 00:16:05,969 --> 00:16:07,619 Speaker 1: forties now I go like, hm, 331 00:16:07,940 --> 00:16:09,700 Speaker 1: maybe I should have take that risk with this amount 332 00:16:09,710 --> 00:16:11,419 Speaker 1: of money that I have and put it in something 333 00:16:11,429 --> 00:16:14,669 Speaker 1: that's more stable. And I'm happy with that those returns 334 00:16:14,679 --> 00:16:16,599 Speaker 1: because 10 years, 20 years from now I'm going to 335 00:16:16,609 --> 00:16:19,099 Speaker 1: be retired, I want to be comfortable. I don't need 336 00:16:19,109 --> 00:16:21,299 Speaker 1: to be mega rich, but I really want to be 337 00:16:21,309 --> 00:16:25,450 Speaker 1: comfortable and retired, enjoying my life. So then those considerations 338 00:16:25,460 --> 00:16:27,750 Speaker 1: weigh on my mind at this age compared to when 339 00:16:27,760 --> 00:16:30,070 Speaker 1: I was 20. Ok. Sounds like me too. 340 00:16:30,229 --> 00:16:35,200 Speaker 1: What's your final advice to investors in the current market? Ok. 341 00:16:35,210 --> 00:16:37,280 Speaker 1: You were saying just now the news, it sounds like 342 00:16:37,289 --> 00:16:39,890 Speaker 1: the end of the world sometimes and then sometimes it's like, well, 343 00:16:39,900 --> 00:16:41,969 Speaker 1: everything is doing so well. If you've been in this 344 00:16:41,979 --> 00:16:44,000 Speaker 1: thing for so long, you realize it's the same old 345 00:16:44,010 --> 00:16:45,780 Speaker 1: thing again and again, it is, isn't it? It's like 346 00:16:45,909 --> 00:16:47,770 Speaker 1: a cycle. It is a cycle and you just have 347 00:16:47,780 --> 00:16:50,609 Speaker 1: to strip away all that noise and realize that at 348 00:16:50,619 --> 00:16:53,200 Speaker 1: the end of the day, if you are investing, you're 349 00:16:53,210 --> 00:16:55,359 Speaker 1: in it for the long term. And if you do 350 00:16:55,369 --> 00:16:57,739 Speaker 1: an ETF dollar cost average strategy, 351 00:16:58,109 --> 00:17:01,419 Speaker 1: you are investing in a basket of great companies based 352 00:17:01,429 --> 00:17:03,820 Speaker 1: on the index and that should grow over a period 353 00:17:03,830 --> 00:17:06,119 Speaker 1: of time. So all this news that comes in and out, 354 00:17:06,130 --> 00:17:07,560 Speaker 1: it shouldn't really affect you 355 00:17:07,828 --> 00:17:11,088 Speaker 1: because you're diversified across maybe 500 companies. All of them 356 00:17:11,098 --> 00:17:13,218 Speaker 1: are still doing business every day. They still have customers 357 00:17:13,229 --> 00:17:15,659 Speaker 1: every day, they are still making money every day. So 358 00:17:15,769 --> 00:17:18,479 Speaker 1: ignore all the noise and strip back to the fundamentals. 359 00:17:18,489 --> 00:17:21,629 Speaker 1: What are you buying? Does it meet your financial goals 360 00:17:21,638 --> 00:17:23,558 Speaker 1: based on your risk profile and all that if it is? 361 00:17:23,568 --> 00:17:25,677 Speaker 1: And it's been working for, you. Stick to it. There's 362 00:17:25,688 --> 00:17:28,149 Speaker 1: no point jumping from one strategy to the next, trying 363 00:17:28,159 --> 00:17:29,818 Speaker 1: to learn a new thing, trying to look for a 364 00:17:29,828 --> 00:17:30,457 Speaker 1: silver bullet 365 00:17:30,699 --> 00:17:32,839 Speaker 1: stick. What works for you stick with it over the 366 00:17:32,849 --> 00:17:35,270 Speaker 1: next 10 2030 years. And at the end of it, 367 00:17:35,280 --> 00:17:37,760 Speaker 1: if you've been managing your money properly, you know, the 368 00:17:37,770 --> 00:17:41,329 Speaker 1: right financial habits, you should be well ahead at the 369 00:17:41,339 --> 00:17:43,438 Speaker 1: end of the day. Yeah, it's always exciting. Right? When 370 00:17:43,449 --> 00:17:46,530 Speaker 1: an investment pays off and you start to see the returns, 371 00:17:46,729 --> 00:17:51,060 Speaker 1: you know, any investment carries risk, so understand your own risk, 372 00:17:51,069 --> 00:17:54,688 Speaker 1: appetite and do your homework before committing your hard earned 373 00:17:54,775 --> 00:17:57,895 Speaker 1: money. Thanks so much, Adam for helping us weigh the 374 00:17:57,905 --> 00:18:01,425 Speaker 1: options on this or that. And thanks to you, our listener, 375 00:18:01,435 --> 00:18:04,694 Speaker 1: if you've enjoyed this episode of Money Talks, there's more 376 00:18:04,704 --> 00:18:07,625 Speaker 1: content for you to enjoy. Simply follow us on Apple 377 00:18:07,635 --> 00:18:11,754 Speaker 1: Podcasts or Spotify. Give us five stars or leave a review. 378 00:18:11,974 --> 00:18:15,324 Speaker 1: The team behind Money Talks is Joanne Chan, Jacqueline Chan 379 00:18:15,334 --> 00:18:18,425 Speaker 1: Christina Robert and I'm Andrea. He.